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(1) The Authority shall within thirty days  after receiving a notice under  regulation 103 serve on the defaulter a written notice requiring the defaulter to do all or any of the following

(a) pay the arrears and the contribution surcharge payable on the arrears to the approved trustee of the registered scheme within the period specified in the notice; 

(b) explain to the Authority the reason for failing  to pay the arrears to enable the Authority determine whether there has actually been a default;

(c) comply with any other requirement specified in the notice;

(d) Lodge with the trustee, when paying the arrears and contribution surcharge, a remittance statement, which shall include the amount of the contribution surcharge paid if the defaulter is a participating employer.

(2) The Authority may not serve a notice on the defaulter where the Authority is reasonably satisfied that

(a) the defaulter has paid all of the arrears and contribution surcharges payable on the arrears to the approved trustee;

(b) the defaulter has paid part of the arrears and contribution surcharges to the approved trustee and that the outstanding arrears and contribution surcharges are irrecoverable;

(c) that all of the arrears and contribution surcharges are irrecoverable;

(d) there has not actually been a default; or

(e) The service of a notice under sub regulation (1) is not reasonably practicable in all the circumstances of the case.

(3) The notice served may include a requirement to produce to the Authority for inspection payroll records or a copy of an auditor's report with respect to those records.

(4) A person who, having been served a notice requiring an explanation under sub-regulation (1) (b), fails to comply with the requirement within the period specified in the notice shall be considered as a defaulter.

(5) The Authority shall send a copy of any notice served by it to the approved trustee of the scheme concerned within thirty days after serving the notice.

(6) An approved trustee who has not received payment of arrears and contribution surcharge within the payment period shall by written notice inform the Authority within ten days after the end of that period.

(7) The Authority may serve another written notice on the defaulter on receiving a notice from the approved trustee.

(8) This regulation does not apply if legal proceedings have been instituted to recover from the defaulter the amount of arrears or contribution surcharge in default.

(9) A defaulter shall comply with the requirements of a notice served on the defaulter under this regulation.